Zacks_Analysts' Blog : Allscripts Beats Zacks Estimate - Analyst Blog

Allscripts-Misys Healthcare Solutions, Inc. (MDRX) reported third quarter fiscal 2010 earnings per share of 17 cents, beating both the Zacks Consensus Estimate and the year-ago earnings of 14 cents.

 

Sales

 

Total revenues in the third quarter increased 11.9% year over year to $179.9 million. Non-GAAP revenues in the reported quarter increased 16.2% year over year to $180.4 million. Non-GAAP revenues in the third quarter of fiscal 2010 included a deferred revenue adjustment.

Non-GAAP revenues in the third quarter of fiscal 2009 included a deferred revenue adjustment and elimination of prepackaged medications revenue that the company disposed off in March 2009.

 

Growth was registered across all business segments. Maintenance sales increased 10.7% year over year to $62.1 million. Transaction processing and other revenues increased 6.6% year over year to $56.3 million. System sales increased 60.9% year over year to $44.1 million. Professional services revenues increased 9.4% year over year to $17.4 million.

 

Total bookings for the quarter were $105.5 million, an increase of 25% year over year.

 

Margins

 

Gross margin in the reported quarter increased 470 basis points (bps) year over year to 56.5%. Non-GAAP gross margin increased 210 bps year over year to 56.6%. Selling, general and administrative (SG&A) expenses as a percentage of sales increased 70 bps year over year to 30.4%. Research and development (R&D) expenses as a percentage of sales increased 80 bps year over year to 7.0%.

 

Higher gross margin offset an increase in operating expenses and resulted in a higher operating margin that increased 350 bps year over year to 17.7%.

 

Balance Sheet & Cash Flow

 

Allscripts ended the third quarter with cash and cash equivalents of $115.8 million, an increase of 62.6% in the first nine months of fiscal 2010. The company had an outstanding long-term debt of $14.0 million at the end of the third quarter. Cash flow from operations was $46.5 million for the quarter.

Outlook

 

Allscripts raised its revenues and earnings guidance for fiscal 2010. For the year, revenues are expected between $700 and $705 million, compared to the previous guidance of $680 to $700 million.

 

GAAP earnings per share should be in the range of 44 to 45 cents, versus the previous guidance of 41 to 43 cents. Non-GAAP earnings per share should be between 64 and 65 cents, compared to 61 to 63 cents in the previously issued guidance.

 

Libertyville, IL-based Allscripts Healthcare Solutions Inc. is a leading provider of clinical software and information solutions meant for physicians. In October 2008, the company merged with Misys Plc, a global applications software and services company, to form Allscripts−Misys Healthcare Solutions Inc.

Allscripts faces strong competition from Cerner Corp. (CERN), Merge Healthcare Inc. (MRGE), Quality Systems Inc. (QSII) and MedAssets Inc. (MDAS). Presently, we are ‘Neutral’ on Allscripts.